The first one of a kind

By Bryan Goldfinger, KF10 Nicaragua

In the nearly eight months that I have been a Kiva Fellow, I have noticed that an increasingly common response people have when I tell them we fund microfinance institutions is: “that’s great, but aren’t those guys just getting really rich by charging the poor tons of money on their loans?” It seems as though recent press has given microfinance somewhat of a tarnished reputation.

It is often the case that unless one is directly involved in an industry, it is difficult to know what exactly is going on within that industry. I make no claim of being an “insider” of microfinance, nor do I believe I am any more privy to industry info than the next guy. However, I was lucky enough to get invited to attend a conference related to a relatively new and growing concept in microfinance.

For two days last week, the first ever Latin American conference on Social Performance Management in Microfinance was held in Managua, Nicaragua. It came to be that several employees from AFODENIC, the microfinance institution I am currently working with, were attending the conference and I was invited to tag along.

For the very first conference on social performance, there was quite an impressive turnout; over 300 people representing nearly every country in South and Central America, Mexico, the United States and several countries in Europe. There were executives and managers from many MFIs, representatives of various international funders (Kiva included) as well as numerous social performance ratings companies. Presentations varied greatly and covered a wide range of topics including the growing importance of social performance monitoring (SPM) in microfinance, experiences and implementation of SPM and how to reconcile social results with financial results, just to mention a few. In addition, Kiva’s very own Regional Director of the Americas, Giovanna Masci gave a presentation on the importance of social transparency in microfinance.

At a time when an increasing number of investors, donors and lenders (Kiva lenders included) are becoming more and more concerned with the social results and social returns on their investments, a conference of this type is of great significance.

Microfinance has a long way to go before it can claim to be socially perfect (what industry can, or for that matter, ever will?), and there definitely are a number of people and institutions demonstrating irresponsible and harmful practices in the name of microfinance. Nonetheless, I find it comforting to know that there are large groups of people and companies that are interested in discussing, rating and trying to improve social performance in the industry. It is not going to make everything better overnight, but such conferences and knowledge share are definitely steps in the right direction.